News
Briefing for Incoming Minister for the Community and Voluntary Sector - December 2008
The Charities Commission's briefing to the incoming Minister for the Community and Voluntary Sector, the Hon. Tariana Turia.
Read the Briefing (Opens in a new window)
Charities Act Test Case Finds In Commission’s Favour
The first legal case under the Charities Act 2005 was tried in the High Court recently
The case involved an appeal by the Travis Trust against the Commission’s decision to decline to register the Trust as a charitable entity under the Charities Act. The central issue of the case was whether the provision of prize money for an annual and significant race (in this case a horse race) is a charitable purpose.
The judgment was delivered by the Hon. Justice Joseph Williams, who found in the Commission’s favour.
The case is interesting (and important for the Commission) because it is the first legal scrutiny in New Zealand of the definition of ‘charitable purpose’ and ‘public benefit’ under the Charities Act 2005. Read the full judgment. (44KB - File opens in a new window)
Charities Commission conducts benchmark survey - Nov 2008
A new survey commissioned by the Charities Commission into the level of public trust and confidence in charities has provided a benchmark for the charitable sector in New Zealand.
The first-time research into the relationship between the public and the charitable organisations seeking public support will assist the Commission in providing support and advice on good governance and management to the charitable sector.
Over 2,000 members of the general public took part in the survey, conducted by UMR Research. As well as testing the general level of trust and confidence in charities, the survey also looked into:
- how the public saw the characteristics and behaviours of charities
- what influenced decisions to support a charity
- amounts and organisations donated to, and
- the level of involvement the public has in charitable organisations and activities.
The key findings were that:
- 58% of respondents reported a high level of trust and confidence in charities. Only 7% reported a low level of trust and confidence in charities
- A majority of respondents expressed a high level of trust in charities to:
- make a positive difference to the matters they address (55%), and
- ensure that their fundraisers are ethical and honest (51%)
- The most influential characteristic in the decision to support a charity was that ‘they make a positive difference to the matters they address’ (41%), followed by ‘they ensure a reasonable proportion of donations get to the end cause’ (18%).
- A majority firmly agreed that:
- I feel more confident in charities that are open about how they use their resources (84%)
- I trust charities more if I have heard of them (75%)
- charities play a very important role in society today (74%)
- I trust charities more if they are clear about how they are managed (73), and
- I trust charities if they assist locally (54).
Health and medical were the most common type of organisations that respondents noted donating to in the past 12 months.
A quarter of respondents noted donating more than $250 to charities in the past 12 months. Nineteen percent donated nothing or up to $20.
Charities Commission Trust and Satisfaction Survey (full report)
Tertiary education institutions
A legislative clarification means that state-funded tertiary education institutions do not have to register with the Charities Commission to retain their tax-exempt status.
Inland Revenue have amended the Income Tax Act and the Estate and Gift Duties Act to clarify that tertiary education institutions are exempt from income tax and from gift duty. The provision applies to institutions set out in the Education Act: universities, polytechnics, specialist colleges and wananga.
The changes also ensure that these tertiary institutions automatically have Inland Revenue-approved donee status so that people who donate money to them qualify for tax rebates for their donations.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
State and state integrated schools
State and state integrated schools do not need to register with the Charities Commission to be exempt from income tax because they already have a specific exemption in the Education Act.
Inland Revenue have amended the Estate and Gift Duties Act to provide that gifts to state and state integrated schools are exempt from gift duty.
Under the change, they also have automatic IRD-approved donee status, so that people who make cash donations to them qualify for tax rebates.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
Non-resident charities
Inland Revenue have amended the Income Tax Act to ensure that non-resident charities that cannot register with the Charities Commission because they are not established in New Zealand or have no strong connection with New Zealand are able to have tax-exempt status here, subject to Inland Revenue approval.
Inland Revenue have also amended the Estate and Gift Duties Act to provide that gifts to non-resident charities will be exempt from gift duty if they are unable to register with the Charities Commission.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
Are there circumstances beyond your control that prevented you from applying before the 1 July deadline to preserve your tax-exempt status?
Inland Revenue have changed the Income Tax Act for charitable organisations that ran into difficulty with completing their registration application before 1 July 2008. This measure helps those charities that qualify for registration under the Charities Act to retain their tax-exempt status for any period they are unregistered.
The legislation provides a limited discretion for the Commissioner of Inland Revenue to preserve the tax-exempt status of charities that were not able to apply to register with the Charities Commission before 1 July 2008, but who can prove they began the process of preparing their application before that deadline.
The measure provides greater tax certainty to organisations that ran into difficulty in preparing their applications, owing to circumstances that may be beyond their control. It does not cover organisations that merely did not get round to applying for registration before the deadline.
Guidelines about what will be required by Inland Revenue to provide proof of having begun the process of preparing an application for registration are available on Inland Revenue’s website.
For more information, see the news release issued by the Hons Michael Cullen, Minister of Finance, Peter Dunne, Minister of Revenue and Ruth Dyson, Minister for the Community and Voluntary Sector.
Backdating
Did you know that we have powers to backdate applications?
We can backdate properly-completed applications (to the date we received them) as long as we are satisfied that the applicant met all our criteria between the date they applied, and their registration date.
A “properly completed” application must include:
- a set of rules
- at least one Officer Certification form
- a certified application form
For more, see our information sheet – Backdating of registration applications
Already registered?
Charities registered under the Charities Act each have a unique registration number. The Commission encourages you to publicise your registration number, and refer potential donors and supporters to your information on the Charities Register.
For more information, see our Guidelines for promoting your unique registration number.
Common application errors
We may need to write to you if we don’t have enough information to register your organisation under the Charities Act. Here’s an insight into the types of letters we send to applicants and why.
Letters indicating the application is incomplete
We cannot consider an application for registration until it is complete. The most common reason for sending these letters is when we receive incorrectly completed Officer Certification Forms (Form 2). Common errors include:
- leaving the certification box blank on page 2
- sending us only page 1 of the form (we need pages 1 and 2)
- a discrepancy between the number of Officer Certification Forms provided and the number of officers specified in answer to question 23 in the application form. (e.g. if you list four officers, you must send four completed forms).
Letters that relate to section 18(3)(a) of the Charities Act, asking for detail relating to your activities
Some organisations’ rules have object or purpose clauses that are very high level and all-encompassing. While it is clear that the organisation has a charitable purpose, it is not clear how their activities might benefit the public.
Letters entitled “Notice that your charitable purpose/name/officers may lead to a decline of your application for registration”
These letters indicate that we have fully considered an application, but there is insufficient evidence in the material supplied to approve registration. Such letters are rare and normally relate to an organisation’s charitable purpose. Receiving one of these letters does not necessarily mean that your application will be declined. Applicants are provided with a reasonable amount of time (usually 20 working days) to make a submission to the Commission.
For media enquiries, please contact:
Sandra Bennett, Communications and Education manager
Phone 04 978 7782
email: sandra.bennett@charities.govt.nz